On Friday, the GST Council had revised the rates on transport of natural gas through pipelines and offshore work, partially addressing concerns on cascading of taxes for the sector. Transportation of natural gas through a pipeline would attract five per cent GST without input tax credit and 12 per cent with it.

“To reduce the cascading of taxes arising on account of non-inclusion of petrol, diesel, ATF (jet fuel), natural gas and crude oil in GST and to incentivise investment in the E&P (exploration and production) sector and downstream sector, the GST Council has made recommendations,” the government stated on Wednesday. On the insistence of states, petroleum has been kept out of GST and, hence, continues to face the cascading effect of multiple taxes. However, certain petroleum products such as cooking gas, kerosene and naphtha are part of GST.

The Council proposed that offshore works contract services and associated services relating to oil and gas exploration and production in offshore areas beyond 12 nautical miles will attract 12 per cent GST.

On Monday, Modi met heads and senior officials from oil companies for encouraging the exploration of hydrocarbons in the country. The participants argued for inclusion of natural gas and electricity under GST.

Import of oil rigs and ancillary goods imported under lease will be exempted from integrated GST (IGST). “It will be subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions,” the Centre said. Read more